What the World Needs Now…is Another Credit Card?

On June 14, American Express announced the launch of the latest in its credit card lineup, the American Express Cash Magnet Card. This brings the total number of personal cards offered by American Express (Amex) up to 18 cards, filling these categories, some of which overlap:

The third in its suite of cash back cards, it comes with an unlimited flat 1.5% cash back on all purchases, no annual fee and a feature called Pay It Plan It. This gives customers the option of paying for large purchases over a three to 24-month period at a fixed monthly fee instead of interest. You can have different payment plans for up to ten purchases.

In this latest entrant to the extremely competitive credit card wars, this newest Amex card seems designed to go head to head with such cards as the Citi Double Cash Card, the Chase Freedom Unlimited card, both of which offer 1.5% or more cash back with no fee (there are also lots of cards with annual fees, including American Express’s own Blue Cash Preferred card, that offer higher levels of cash back). Unless you’re the Points Guy, it can be difficult, not to mention time consuming, to figure out which card is the best one for your needs.

Why a new credit card?

Amex has been aggressive in developing new products and offering new benefits and rewards to facilitate customer acquisition and retention, particularly after losing one of its biggest corporate clients, Costco, in 2014/2015 to Capital One Mastercard in Costco Canada and Citi Visa in Costco U.S. While the company was back at its pre-Costco loss levels in terms of stock price and other indicators by third quarter of 2017, quicker than anticipated, the impact continues to be felt in its new product strategies.

Keeping it all in the family

Individuals/families tend to use credit cards en masse if possible, with different family members selecting cards based on their situation. Younger credit card users might go for the low/no-fee more barebones card, while more established members of the family are willing to pay a higher fee for more benefits, frills and, sometimes, just for the cache of having the most premium card available. This card fills a gap on the no-fee simple cash back option that others offer, giving Amex the opportunity to capture more share of wallet and reinforce its value to its customers. And its special Plan It twist, plus some of the benefits that (for now) Amex offers, such as Shoprunner membership, car rental and travel accident insurance, help it stand out in a crowded marketplace.